Poverty

"Plutocracy says: There's no use growling. Your burden is no heavier than mine. Look at the taxes I am carrying."

A Georgist Analysis of PovertyA Brief Overview and Quotes from the Film

The philosophy of Henry George offers a distinctive perspective on the problem of poverty. Although there are hints of that perspective in “The End of Poverty?” no film could possibly capture its complexity. For simplicity, we will refer to the philosophy of Henry George as “Georgism,” although it also goes by other names, such as Geo-economics, Geonomics, and cooperative individualism.

Perhaps the quickest way to get a sense of Henry George’s view of poverty is from the cartoon by Frank Beard entitled “Double Burden.” Poverty does not stem from an insufficiency of resources. Instead, it derives from a system in which the poor bear the burdens of the rich (paying rent to the landlord, interest to the bank, and taxes whenever they buy anything). If the rich would get “off the backs” of the poor, the problem of poverty would largely disappear.

That the same principle operates on a global basis is made clearest in the film by Susan George, who points out that debt repayments from the global South to the North are many times larger than the foreign aid supplied by the North to the South. On a global scale, the poor are again carrying the rich and supporting them.

Henry George became famous throughout the world in the last quarter of the 19th century by resolving a paradox: Why do growing economies generate a greater percentage of poor people than before? He had three related explanations:

The basic cause of poverty lies in the private appropriation of the value of land and natural resources. (Unequal wealth)

Private land ownership allows land and resources to be held out of use, so that unemployed people who could use them productively are not allowed to. (Denial of access to land.)

When the best locations (best farmland, best locations for offices or retail stores) are not in use–due to land hoarding–second- and third-best locations are used instead. Since wages for an economy are set according to productivity on the least valuable locations, wages are thus lowered as a result of land hoarding or “land monopoly.” (Marginalization of labor lowers wages.)

Economist Mason Gaffney (interviewed for the film, but not shown) summarized the process by example of the Philippines, a former US colony, and one the poorest (most malnourished) nations on earth:

“In the Philippines, the mass of the people are pushed off the most productive lands into the hills. In the hill province of Baguio, farmers barely eke out a living on land so scarce that people have had to laboriously terrace the hills. By contrast, the province of Tarlac has rich, flat land where they grow sugarcane. The wage level is about the same in both places. That is because the landowner in Tarlac has to pay workers only as much as someone can earn on the worst quality land in Baguio. The difference between what the better land and the worst land yields is the economic surplus or “rent” of land. The surplus value produced by the more fertile land in the valley is pocketed by the landowners.”

In somewhat less precise form, Eric Mgendi, of Action Aid in Kenya, expresses the same idea discussing what happens when a poor widow is displaced from her farm to make way for a large, mechanized plantation. “Economists may calculate that a foreigner can use technologies to earn more income from that land. But who receives that income? The foreigner…. Foreign investment might mean higher recorded economic growth on the one hand, but it means increasing poverty on the other hand.” In short, it is not enough to increase the economic productivity of a country. It is equally important to share the surplus, because that surplus ultimately derives from the underlying resource base. Top

Henry George believed that people had a right to entire product of their personal effort and no moral duty to share it with others. By contrast, he believed that no individual had a valid claim on the value that comes from natural sources. That income should be shared equally among all people. Thus, anyone who lives on income from land or resources is effectively living off the sweat of others. On that basis, George defined poverty in terms that are different from most other definitions.

By “poor,” Henry George did not mean people with incomes below some arbitrary “poverty line.” Instead, he defined rich and poor in relative terms in the following way: Anyone receiving greater income or wealth than his/her contribution to an economy is “rich,” and anyone receiving less than his/her contribution is “poor.” In short, anyone who is denied the full use of his/her wages is deemed poor, regardless of income level.

By Henry George’s definition, many people currently regarded as “middle class” in the US or elsewhere would be “poor,” simply because their income consists solely of wages, and those wages are heavily taxed. The rich are those who live primarily on property income rather than wage income. Top

There is a long-standing debate about whether poverty should be understood in absolute or relative terms. Absolute poverty means a person or family lacks certain basic necessities of life (such as food or shelter). Relative poverty means that someone has so much less than others that he or she is treated as a second-class citizen or subhuman.

This is a very complex subject, which deals with questions of cultural meaning. Perhaps the best approach is to recognize that both ways of looking at poverty have validity. Practically speaking, a conflict arises only when conservatives use an absolute standard of poverty to claim that no one with certain electric appliances can be considered poor, since even rich people did not have them two centuries ago. That way of dismissing the problem of relative poverty denies the experience of millions of parents who know their children have fewer opportunities from the start of life because of their relative status.

There is no question that Henry George firmly endorsed a relative view of poverty. It is perhaps significant that he and his family came close to starvation at one point, and yet he did not seek to use that as the basis for a theory of absolute poverty. Instead, he took for granted that resources are abundant and that the problem lies with distribution. It that premise is true, then an emphasis on relative poverty is clearlly the correct one.

Finally, as Joshua Farley points out in the film, the level of violence in a society is highly correlated with the degree of inequality or relative poverty and almost completed uncorrelated with the degree of absolute poverty. Thus, there is little violence in Ethiopia, where almost everyone is poor, but there is a lot of violence in Brazil, where the rich-poor gap is large and obvious. Top

The internal logic of Henry George’s understanding of wealth and poverty meant that he did not favor the modern welfare state, which taxed wages and then redistributed that income through programs to help the poor. That approach to poverty amounts to charity, not justice. It robs the wage-earner and fails to provide the recipient with the chance to earn a living, which is what most people want. The question then becomes whether it is truly possible to create an economic system that can achieve full employment without inflation and other forms of instability. That is too big a question to deal with here. Suffice it to say that George was not simply proposing a transfer of wealth within the existing economic order. He was proposing an economic system that was different from both capitalism and socialism, a system that lies beyond the imagination of most social scientists who assume that collectivization and privatization are the only options. Top

Although Henry George defined poverty in economic terms (see above), he also clearly understood that it had political and social ramifications. He regarded chattel slavery as an unambiguous evil precisely because it robbed the slave not only of freedom but also of dignity. What set George apart from most of others of his day (and ours) was his recognition that privatization of resources forced everyone to work for those who monopolized them, thus re-introducing slavery on a broad scale in a different form. His repeated analogies between wage slavery and chattel slavery indicate that his fundamental concern was not with some narrowly economic definition of poverty. His deepest concern was with the effects of poverty on the human spirit. Thus, it would be fair to say that he opposed any institution, whether in law or custom, that demeaned the spirit of some portion of humanity. Top

Whereas the film focuses on the connection between the legacies of colonialism and poverty today, there is nothing in Henry George’s writing that deals explicitly with this issue. Nevertheless, George’s larger concern with social equality and his rejection of any form of domination of one person by another are indicative of his general opposition to empire-building and colonialism.

Historically, there would have been little impetus for gaining control of territories overseas if the value derived from land and resources had been divided equally among the populations of European nations. The abuse of colonized peoples around the world was, to a great extent, an extension of the abuse of peasants and workers in Europe. After driving their own people off the land and into the “satanic mills” in the 19th century, is it surprising that the elites did not treat kindly the people they conquered in Latin America, Africa, and Asia.

Thus, even though many of the issues raised in the film about debt, unfair trade, and other forms of neocolonialism were not addressed directly by Henry George, the campaigns to overcome those unjust conditions is certainly in keeping with the spirit of Henry George. Top

QUOTES FROM THE FILM

GEORGE’S INSIGHTS ABOUT THE CAUSE OF POVERTY
(private ownership of natural resources)

H.W.O OKOTH-OGENDO author/law professor, KenyaWhen the British came, towards the end of the 19th century, their concern was to justify expropriation of land which did not belong to them. The way they did it was to use their own legal system. They did this, precisely, through an advice that was given to the colonial government on the 13th of December, 1897, that said that, in countries where there is no settled form of government, the land belongs to the Queen of England. Having declared that there was no settled form of government, they appropriated ultimate title to the land. They passed laws that said so, and then they were able to give settlers freehold interests, 999 year leases and other forms of leasehold.

MIRIAM CAMPOSMinistry of Indigenous People, BoliviaA few families own large quantities of land which do not produce anything, and in the meantime the indigenous people cannot use their own land. The reason is that by law, each head of cattle is allowed between 5 and 50 hectares of land. For one head they can justify 50 hectares of land. These are unproductive lands that have been “engrossed.” It is a case where someone can profit from the land without producing anything. These are “Latifundios” [large land tenures]. Major Latifundios come from colonial times and have been perpetuated by the system.

MARCELA OLIVERA April foundation/ Water Defense Coordinator, BoliviaSome parts of the law said that all the water sources suddenly will not belong to the communities, or to the people, or neighborhoods. They will belong to the water company now. Suddenly, these things that were common, were not common anymore.

NIMROD ARACKHA Tanzanian Mine Workers Development OrganizationBefore the big corporations amassed the huge chunk of lands that they have there, coming up with the minerals was not that hard, mining was not that difficult. The big corporations, they were given the most productive areas to mine on. So, had it not been for them coming there, then people would still be mining there and the situation, I believe, would have been different right now. . . The mining fields that they are holding right now belong to the locals. So, once you take something from somebody, then you leave him with nothing. People have been left. People are being impoverished here, severely, by the coming of the big companies here. A lot of money has been siphoned out of the country as a result of this trade. So, that money that would have been otherwise used for the locals here is being siphoned into some foreign countries.

CLIFFORD COBBauthor/historian, USA
There are a fixed amount of natural resources in the world and those who own the resources—land, air, water, and so on—are able to charge higher and higher prices for them as an economy develops. In order to understand that, I think it would be useful to consider a fictitious example of what would happen if we lived in a society in which there was only one oasis that had all the water, to which everyone had to come for their water supply. If a single person owned that water supply, that oasis, we would all be forced to pay as much money as we were able to for that water. Now, further imagine that if you lived in that society and you were having to pay huge amounts for some resource that could in fact be owned by all, because it came from nature, and there is no particular reason for one person to own it. . . . The resources of nature are given to all of us and yet a handful of people and corporations have control of them, oil companies being a prime example that everyone is familiar with. If we could enable everyone to benefit from those resources we could end poverty, and the way to do that is by restoring the idea of the commons. It means that the value that is currently gotten from those resources, that is currently being privatized, in the hands of the corporate share holders of oil companies or other mining companies or real estate syndicates, and so on—instead of it being privatized, it would be made available, be shared by all. That is basically what the commons means.

JOHN PERKINS author/economist, USA
You take away their resources so you can have it, so what do they get left? And as time goes on and that resource no longer is valuable. Gold—nobody really cares that much about gold these days, which is what the conquistadors were after. But today, those same countries, a lot of them have oil. And so, we took away all their gold, we destroyed their cultures, and now we are saying, “and now oil is the big one, and we are going to take that, too.” Or gas, or whatever. Or water, whatever. You perpetuate this terrible system of poverty and this system of desperation and anger. Top

GEORGE’S UNIQUE DEFINITION OF POVERTY(poverty means being deprived of the fruits of one’s labor)

AMARTYA SENauthor/Nobel Prize, economics UK
Hobbes’s statement of life being nasty, brutish, and short is a characterization of poverty. There is no reason for us to take any different view than that. It is a question of understanding what it means in today’s context, given the fact there are means of enhancing wealth, means of curing illnesses and postponing death, means of making our life comfortable. Given all that, if people still suffer from deprivation, well then in the present context, we have to regard that as poverty.
(commentary on how George’s view of poverty differs from Sen’s view; for George, poverty could not exist in absence of expropriation of labor value)

MASHENGU wa MWACHOFIformer parliamentarian, Kenya
By becoming a British colony, you actually became a property, both the country and the people. And, if you look at history, the natives were not recognized as human beings. So, all of you are total property of the Empire. In the particular district I come from, the natives refused to work on those plantations. And if they did come to work, they would come on their own time. Sometimes, they would not come. So, that is why you introduce labor laws through the “kipande system.” The kipande system is a system of registration, where every male, the moment you turn 16 you have to have a labor record, and that is the one that is used for ensuring that all male laborers would work, and that is why the colonial labor laws really were slave laws. Top

JOSHUA FARLEYProfessor Ecological Economics, USA
It is very interesting that if you look at the societies with the least equal distribution of income, they tend to be the most violent. There is a very small correlation between absolute poverty and crime. There is a strong correlation between unequal income distribution and crime. So, you look at the poorer societies they are not at all the ones that are the most violent, it is the ones that have the biggest discrepancy in incomes that are the most violent.

ALVARO GARCIA LINERAVice-President, Bolivia
Either we are all emancipated or none of us is. The ones who think things are fine because they have plenty of hot food and water in their house and think they have “made it” are wrong. It is only temporary and uncertain. When a lot of people do not have water to drink, one’s stability is fragile. The stability of each person in your country or mine can only guarantee their continued well-being if the others’ well-being is guaranteed also.

AMARTYA SENauthor/Nobel Prize, economics UK
You may not be able abolish poverty and usher in the golden age by just saying, “Just eradicate private property, and everything will be all right.” That will not work, and you have to recognize that it will not work, and the temptation to go in that direction may have to be restrained by realism, but at the same time it is important to understand that those who are asking for that were not asking out of a fad, they had a real issue in mind, that inequality of property and ownership is a cause of inequality of divided fortunes in our lives.

OSCAR OLIVERA former worker/ Water Defense Coordinator, Bolivia
The Bolivian government, following a decision and an order from the World Bank, decided to privatize the water and to do so, started the following. First: they passed a law concerning drinkable water, and gave a 40-year concession to the international corporation, Bechtel.

ABEL MAMANIWater Minister, Bolivia
In the case of railroads they have practically disappeared since they were privatized. In the east we do not have trains anymore. They have been entirely dismantled. Last month, if I am not mistaken, workers went seven months, seven months without wages. The country has been destroyed, and that is the consequence of privatization. Top

CHARITY VS. JUSTICE(issues of debt, trade, taxation)

CLIFFORD COBBauthor/historian, USA
Poverty in the world cannot possibly be eliminated, unless the poor themselves say, “We insist on justice not charity.” One example of that justice is forgiving international debt. The second element would be to change the tax system in every country of the world. Right now most taxes fall on the poor in the form of consumption taxes and taxes on wages. If justice is to be done, most of the taxes should fall on property ownership and not on wages, not on people. Third, the poor should demand agrarian reform, land reform, restoring land to the people who actually work on it, instead of a few landowners. A fourth thing is to end privatization of natural resources. We have seen in Bolivia what is possible, where the Bolivian people actually took back the water that had been given to Bechtel and they forced Bechtel out of the country. Now the Bolivian people once more own that water.

SUSAN GEORGE author/ Transnational Institute Chair, France
Sub-Saharan Africa, which is the poorest part of the world, is paying $25,000 every minute to northern creditors. Well, you could build a lot of schools, a lot of hospitals, a lot of jobs—you could make a lot of job creation if you were using $25,000 a minute differently from debt repayment. So there is this drain, and I think people do not understand that it is actually the South that is financing the North. If you look at the flows of money from North to South, and then from South to North, what you find is that the South is financing the North to the tune of about $200 billion every year.

JOHN CHRISTENSENDirector, Tax Justice Network, UK
The Washington Consensus had four key strands. First of all, capital account liberalization… The IMF and the World Bank, by liberalizing capital flows, opened up a wholly new criminal environment where capital could be shifted into tax havens around the world and evade tax. And this has happened on a truly astonishing scale. To give an idea of the size of this movement, the most recent estimate of the volume of capital now held offshore by rich individuals is 11.5 trillion U.S. dollars, a stunningly large figure.

The fourth strand of the Washington Consensus was sell off your state’s assets, and in most cases they were sold off so badly and the fees that were paid to World Bank consultants and all of the Western consultants involved were so astronomical that the end prices that many developing countries got for themselves were minimal. . . .

JOSEPH STIGLITZFormer World Bank Vice-President/ Nobel Prize, economics, USA
In some countries rapid liberalization of trade has meant that corn farmers have to compete with heavily subsidized corn. Their income goes down, up to 50%, as a result of that competition. Sugar, each of the commodities we can talk about, the liberalization of the market, opening the markets to highly subsidized agriculture drives down the price and forces these farmers out of business. Or, if they stay in business, leads them to have much lower income. Another example is intellectual property. The intellectual property regime has made access to lifesaving drugs much more difficult for the poor countries. It was essentially signing a death warrant on thousands of people. Top

LARGER MEANING OF POVERTY(slavery as the most extreme form of poverty)

MIRIAM CAMPOSMinistry of Indigenous People, Bolivia
In fact, now in the 21st century, we still have families that are captive. We call them “captive” or “retained” but in fact they are slaves. This is the real world, they are slaves, because they do not receive any pay for their work. They have debts that they transfer from generation to generation. They cannot even leave the farms because they are indebted to their bosses. And it is not only individuals but whole families. The children work. They do not go to school because they have to work. Work in exchange for what? Nothing, only food.

JAIME de AMORIMCoordinator, Landless People Movement, Brazil
The grower sees the worker as a slave. They have not rebelled, so today growers have a much easier way to accumulate wealth than during slavery. Back then, the boss was the slave’s owner. He had to take care of the slave’s health and food; he had to take care of shelter even if it was the slave’s quarters. Today the boss has no such concerns. He just has to drive the truck to the outskirts of the city; the truck loads up, he takes them back. No more worries. Once the cutting is done, the worker, who lives on the outskirts, has to find another way of surviving, selling popsicles or popcorn. Kids go into prostitution, into drugs; they go find other alternatives in the world of crime. Top

COLONIALISM AND IMPERIALISM(extending the instruments of economic domination to a global system)

NORA CASTANEDAWomen’s Bank President, Venezuela
Independence did not bring economic liberation. We stopped being a Spanish colony to become a British one, and then a colony of the United States. During the entire 19th century, Venezuela continued to be an exporter of coffee and cacao. At the end of the 19th century, the second worldwide industrial revolution took place. It was known that oil existed in Venezuela because when the conquistadors arrived they saw the natives using oil as medicine and to repair their boats. Venezuela became much more important. We stopped being an agricultural country and became an oil-mining one.

MARIA LUISA MENDONÇARede Social President, Brazil
Our government needs to stop thinking of Brazil as a colony. You know, the policies we have right now are the same as we had in the period of colonization. You know, over and over in history, the function of Brazil in the international economy was to produce cheap goods for the North. Before, at the beginning was sugar, now we are back to the sugar cane production, then it was coffee, then it was gold. You know, we are always producing cheap basic materials for the North.

ERIC TOUSSAINT author/President CADTM, Belgium
It is very precise that in the 18th century the Indian textiles were of a much better quality than those of the British. The British destroyed the Indian textile industry and prevented merchants within the British Empire from importing fabrics and other manufactured products from the colonies. Therefore, everything was produced in London using Indian techniques and such textiles were imported from London and forced upon India. It is a case of exploitation, a case of plundering and of destruction of what existed there.

KIPRUTO ARAP KIRWAAgriculture Minister, Kenya
Those challenges are still there. Some of the [British] settlers, when they moved from this country in 1964-65, up to 1970, now, they benchmarked [reestablished] the operations in Europe, and, therefore, we became the producers of raw materials, and they were now the agents for marketing and processing. Therefore, all the value-addition of our crops was done away from Africa. Because, like roasting of coffee, just to pick that particular crop, is done away from Kenya. In fact, you are aware that Germany, which does not have a single bush of coffee, is the largest exporter of coffee. Tea is the same. The tea that you consume in Sudan, you take it first to Europe, then, Lipton brings it back to Sudan and a number of other countries in northern Africa, and a number of other countries.

CHALMERS JOHNSONauthor/former CIA analyst, USA
There is no question that over the years the government has used its imperial apparatus for economic purposes for the advantage of American firms. Perhaps the best examples are the United Fruit Company in Central America… . After the overthrow of the government of Guatemala in 1954 by brutal, very brutal means against a small and defenseless country, over the years, leading to civil war and police repression, at least 200,000 Guatemalan civilians have lost their lives. All this was done because the United Fruit Company objected to some rather modest proposals for land reform. You can carry it on to the CIA’s intervention against Allende in order to bring to power probably the most odious military dictator in the Cold War period, General Pinochet. Here the interests were primarily of IT&T Company, they participated closely—that is International Telephone and Telegraph—participated closely with the CIA, financing and funding and plotting the coup against Salvador Allende. Also, equally in Chile, the mining interests of the big copper firms. American imperial power has long been used in Latin America in order to protect the interests of extractive industries, in very poor countries such as Bolivia, and places of that sort.

MICHAEL WATTSauthor/ professor, USA
Iraq represents an instance of what I have called military neoliberalism. It represents an attempt now, to push forward the American neoliberal project, previously attempted to be secured through hegemonic consensual means, militarily. It is as if the United States is using classic late 19th century gun-boat diplomacy to break down the doors of markets, to push forward its agenda. So, that is how I see it. Not that it is about oil at all, but this is not in any simple sense about getting that black stuff. Top

3 Responses to Poverty

The mechanism created by the laws within many present macroeconomics systems of so many countries, is so heavily biased toward land ownership and the ability for banks and land owners to monopolize and speculate in land values, that no amount of political influence is at all likely to change these dire circumstances. This means that although the differences between the rich and poor will fluctuate to a limited extent, the overal differences over a long time must grow continuously with the growing amount of revised (better?) technology and land values being held unfreed and unused. It is all very well for us Georgists to be able to claim that we know the answer and can justly place the blame where it richly deserves to be felt, but without a bloody revolution to change the moral attitude of greedy and selfish trends to land ownership as a social phenomena, there seems to be no hope for a political change in the right direction.

Wealthy land owners and organizations will continue to support our educational institutions with the denial of a true explanation about how macroeconomics actually works, and this result is self-perpetuating. Past civilizations have fallen due to the power that land ownership has given to the monopolistic use of slavery and the failure for the nation to provide fair and just social conditions for all of its members. How can our country manage any differently without a revolution against the degree of corruption and immorality by which our present society appears to thrive?

How many years before the flow of Georgist tearchings on social justice and ethics will wear away the rock of gross privilidge and selfish greed for anything but the existing grossly wrongly biased and immoral organized kind of community in which we have no choice but to share?

Let me try to answer this question. Perhaps there is an answer other than what I claimed before, namely that bloody revolution is the means for eliminating the huge and growing poverty gap. The alternative answer just might be in more sincere and complete macroeconomics education.

Of course the land monopolists and banks control the purse-strings of the educational institutions, which biases and limits current teachings about our social system (macroeconomics). Fortunately, today, the universities are not the only sources of information that are available to students. We also have a noticable movement in certain places for direct economics education through the internet and some (a few) of these websites are not duty-bound to follow the tramelled ways of the universities.

This means that interested students whose aim is to understand what REALLY is going on, rather than obtain an academic qualification, at last have a chance to find out, in a more balanced and complete sense, about of what our social system consists and how it works. The key piece of information to this is the means for and construction of a complete model of the whole system, which is neither too complex and difficult to understand, nor too simple (as in the past and in most current texts).

Such a model may be found in Wikimedia, commons, macroeconomics as: DiagFuncMacroSyst.pdf
which is the result of a lot of unbiased and careful thinking on my part (which also goes by the name Macrocompassion).

Using this logical and scientific model, (which incidentally is the first version to include properly Adam Smith’s three factors of production of land, labour and capital, and resulting in ground-rent, wages and interest or dividends), it is possible to construct a theoretical method for representing and simulating the progress of a country’s economy and to experiment with different governmental kind of policy-decisions.

If indeed better education is the alternative hope for the elimination of the poverty gap, it will take years of patience and loving care in the up-dating of what today goes for unscientific theory. I find that “Progress and Poverty” to be unsatisfactory here, and a dire need for something shorter and more directly to the point of social engineering.

To place our bets on this possibility working is the biggest gamble, but as Georgists it is all that we have! Politics and party membership have not proved sucessful, because when the cards are down, the politicians regard our proposals as a means to an end and not an end in itself. So its up to the next generation of students.

“The End of Poverty” is about the roots of global poverty. Hunger and deprivation are not portrayed as problems that can be solved with technology, foreign aid, or development planning. Instead, this film reveals the ways poverty arises from neocolonial policies that lock poor countries into a state of dependency. Foreign aid and economic development have been frauds, costing millions of people their lives. By tracing the global history that has led up to the current situation, “The End of Poverty”/strong> dispels a number of myths. It then offers a new framework with which we might begin to address the true causes of poverty.The Movie
The movie website www.theendofpoverty.com

Why Global Poverty?

After seeing the documentary"The End of Poverty?" you will want to buy the official companion book Why Global Poverty? It contains a director's narrative, the complete transcript, and over 70 interviews.Why Global Poverty?